Mr. Bowler’s bio as listed on the Treasury website:
“Timothy J. Bowler is the Deputy Assistant Secretary for Financial Stability at the U.S. Department of the Treasury. In his role, he is responsible for overseeing the implementation and wind down of the Troubled Asset Relief Program (TARP) and maximizing the return for taxpayers from the various investment programs that were launched under TARP. His responsibilities also include ensuring that Treasury continues to operate every TARP program with the highest standards of transparency and accountability.
Prior to joining US Treasury, Tim worked at Goldman Sachs where he was a managing director in their Financial Institutions Group. Before joining Goldman Sachs, Tim worked at JPMorgan in various capital markets and risk management roles.”
Also on the Treasury site:
“The Office of Financial Stability (OFS) was created within the U.S. Department of the Treasury in October of 2008 following the passage of the Emergency Economic Stabilization Act of 2008 (EESA). The mandate of OFS is to implement the Troubled Asset Relief Program (TARP) to help stabilize the U.S. financial system and promote economic recovery, following the 2008 financial crisis.
OFS is led by an Assistant Secretary for Financial Stability, who is appointed by the President and confirmed by the U.S. Senate. With the government’s authority to make new commitments under TARP having expired in 2010, OFS is now carefully managing the wind down of TARP and the effort to recover taxpayers’ outstanding investments.”
So, Timothy Bowler is one of those “revolving door” Wall Street-Washington officials. Did Mr. Bowler have a view of Fannie Mae and Freddie Mac while on Wall Street?
The following is a passage from a July 2011 article from The Structured Finance News, which featured Timothy Bowler when he worked at Goldman Sachs (where Henry Paulson also served as Chairman and CEO):
Big Wall Street players view REITs as essential to a mortgage-market recovery.
“We see REITs as playing a very important role in the future of mortgage finance, particularly once there’s a resolution as to how Fannie and Freddie will evolve,” said Timothy Bowler, a managing director in Goldman Sachs’ financing group.
He added that his firm is starting to see REITs currently focused only on agency RMBS moving toward more of a “hybrid” model, where they are building the credit expertise to invest in non-agency bonds. “Certainly, when we talk to REITs, they are focused on moving away from an agency-only model.”
Bowler said that Goldman sees three reasons for REITs’ growing importance going forward. First, existing RMBS assets have favorable enough pricing and leverage characteristics for REITs to meet their dividend targets and, in a virtuous circle, attract additional capital. Second, they will be able to buy assets without the capital concerns faced by banks.
And third, “REITs should develop over time the operational advantages and infrastructure to enable them to very efficiently assess credit and interest-rate risk,” Bowler said. “REITs are uniquely positioned to develop that expertise in-house because they’re primarily focused on mortgage products.”
It is established that Mr. Bowler is in a position of authority now to influence the fate of Fannie and Freddie. It is also established that, prior to joining Treasury, he had opinions about Fan and Fred and in particular what Wall Street financial instruments could take their place if FnF ceased to exist. It will be curious to watch if Mr. Bowler returns to Wall Street to manage the increased mortgage business as a result of a diminished Fannie and Freddie.
Is there any proof that Mr. Bowler, while he was the lead Treasury official responsible for managing the aftermath of the financial crisis, played any role in attempting to weaken or terminate Fannie Mae and Freddie Mac?
Well, yes, Mr. Bowler’s fingerprints appear to be all over the Sweep Agreement (the one that serves to wind down Fan and Fred so that Wall Street REITs can take their place).
In Fairholme’s Annual Report released last week, it cites documents that the US Government classifies as “confidential and privileged.” Each of these documents have Timothy Bowler’s name associated with them and they all relate to the 3rd Addendum or Sweep Agreement (which occurred on August 17, 2012).
Here are the communiqués that Mr. Bowler received (which the US Government does not want to become public):
04/23/2012: Confidential report prepared for Treasury by consultant Moody’s relating to Treasury policy and the GSE’s capital positions.
07/13/2012: E-mail communications among Treasury staff containing predecisional information and analysis related to the PSPA.
07/19/2012: E-mail communication among Treasury staff containing draft predecisional policy information and analysis related to relationship between Treasury and FHFA.
08/01/2012: E-mail communications among Treasury staff containing predecisional information and analysis, including discussion with White House staff, related to future GSE draws.
08/07/2012: Predecisional internal forecast of the GSE profitability and PSPA capacity over time, prepared by Treasury staff for purposes of proposed changes to the PSPAs.
08/17/2012: Treasury initiates the 3rd Amendment to the PSPA – Government seizure of private companies’ (Fannie and Freddie) current and future profits.
08/18/2012: Bulletin News President; Senior White House Staff; Geithner, Timothy. White House News Summary prepared for the President and senior White House staff on a variety of issues, including changes to the PSPAs.
09/16/2012: E-mail communication among Treasury staff containing predecisional information related to the methodology for valuing Treasury’s senior preferred stock in the GSEs.
Fairholme’s conclusion is best and worth repeating here:
“More than just patience, this investment requires persistence. Every major financial institution relied upon federal government assistance during the 2008 crisis. Each institution repaid the Treasury in full, plus interest. The same is true of Fannie and Freddie, yet only they remain under the day-to-day control of a federal agency. Government cannot pick private market winners and losers. We forge ahead with the facts squarely on our side, and the assurance that no one is above the law.”